Those on the left want to talk about redistributing wealth but have very little interest in the most fundamental issue, which is how wealth is created. Where does it come from?
Why, when we look around the world, are some countries so much more prosperous than others?
Or why, when we look at our own country, do we go through periods that are more prosperous than others?
America’s most famous socialist, Senator Bernie Sanders, calls this tax bill a “massive attack on the middle class,” claiming that the priority of the bill is “multinational corporations and not working families.”
It is true that one of the major features of this bill is a large cut to the corporate tax rate. But is this bad for working families? Where, after all, do working families work?
Where does the investment take place that creates the jobs that employ and pay the working Americans that Sanders claims to care so much about? Isn’t it in the interest of working families that places where they are employed, or seek employment, prosper?
The World Bank publishes annually its ease-of-doing-business index which combines indicators of ease of starting and operating a business in 189 countries. It measures, in general, the severity of regulation and taxation of businesses.
Why does the World Bank bother with this? Because the more business-friendly the country, the more we see economic prosperity in that country.
Contrary to what Sanders thinks, what is good for business is good for the working families they employ.
Hoover Institution economist John Cochrane has shown the correlation between the ease-of-doing-business score of each country and the per capita income of that country. The higher the ease-of-doing-business score, the higher the per capita income.
When Cochrane looked at the data in 2016, the U.S. had a score of 82 on the index and a per capita income of $53,000. China had a score of 61 and a per capita income of $7,000. India a score of 50 and a per capita income of $1,455.
It’s pretty clear that American workers benefit enormously by the good business environment in the U.S., compared with other countries.
Now they will benefit even more as a result of cutting the U.S. corporate tax rate, currently one of the highest in the world. It will encourage business expansion at home and discourage movement abroad of businesses seeking a more tax-friendly environment.
This friendlier business environment will produce higher incomes and faster economic growth.
The eight years of the Obama administration had the lowest economic growth, averaging 1.6 percent per year, since the end of World War II.
According to Cochrane, the U.S. economy grew 3.5 percent per year on average from 1950 to 2000, more than twice that of the Obama years. If over that last half-century the economy grew at the 1.6 percent annual rate of the Obama years, per capita income would be less than half what it is today.
So, please, let’s stop with the nonsense about the tax bill favoring businesses and the wealthy over working Americans.
Envy doesn’t make a nation great and prosperous. Investment, growth and prosperity do.
This is what we are getting in this most important tax reform in years. It helps restore a tax code that encourages rather than punishes wealth creation. This is exactly what all Americans need.